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2015 (7) TMI 642 - ITAT HYDERABAD

2015 (7) TMI 642 - ITAT HYDERABAD - TMI - Disallowance of Excess Depreciation claimed on Wind Mill - CIT(A) deleted the addition - whether generator, transformers, HT lines, miscellaneous civil works will form part of wind mill so as to get 80% depreciation under that category? - Held that:- The above units which are treated by the AO as separate independent Plant & Machinery are integral part of windmill system and has no independent existence as plant and Machinery. The civil works such as fou .....

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er of Income Tax (Appeals)-4, Hyderabad dated 23-01-2015. Revenue has raised the following grounds: "2. The learned CIT(A) erred in deleting the addition made towards the Disallowance of Excess Depreciation claimed on Wind Mill. 3. The learned CIT(A) erred in considering the Transformer, HT, Electrical supply unit as integral part of Wind Mill". 2. When the notice was issued and the case was taken up for hearing, none appeared on behalf of assessee. So appeal is being decided after hea .....

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; 13.91 Lakhs, HT of ₹ 19.45 Lakhs, Electrical supply of ₹ 27.56 Lakhs, total ₹ 60.92 Lakhs and certain civil works as excess depreciation. He was of the opinion that higher rate of depreciation was not allowable in respect of this expenditure which is not part of wind mill. Accordingly, he allowed depreciation @ 15% and on civil works, @ 10% only. 4. It was submitted before the Ld.CIT(A) that : "i. Wind Mill Project included following Two bills (enclosed) of ₹ 90,09 .....

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rected over vast stretch of open land which are subject to high velocity winds and on cultivable lands all comprised in one Windfarm Project No WTG 1.5MW. iii. The second Bill ₹ 38,74,000/- relates to payment to Tamil Nadu Electricity Board for the purpose specified mentioned therein and in no way can be construed as for any Building civil works. iv. There are no Buildings civil works in nature incurred, wherein anything is sheltered, comprised in the Windmill project erected by the Assess .....

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consisting of one WTG for your 1.50 MW Windmill at Location No. R232- ₹ 19,45,845. 3. Electrical Items, components of renewable energy device/windmill, in respect of windfarm project consisting of one WTG for your 1.5 Mw Windmill at Location No. R232- ₹ 27,56,000. ii. It is submitted that the description as detailed in the above three bills categorically specify that the items mentioned herein are component & Accessories namely Transformer, HT and Electrical items embedded with .....

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ndmills and all the plant & machinery are part and parcel of the composite and integrated Wind Mill Project and are entitled for higher depreciation as set out in the Act". It was contended that the true basis of depreciation allowance is the character of an asset and not its description. 5. Ld.CIT(A) after considering assessee's submissions and relying on the co-ordinate bench decision in the case of ACIT Vs. Rakesh Gupta (Chd-Trib) [60 SOT 81], deleted the disallowance made by AO .....

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he case of ACIT Vs. Rakesh Gupta (Chd-Trib) 60 SOT 0081 where on a similar issue, it was held that expenditure related to generation and transmission facilities would be part of the capital asset and eligible for higher rate of depreciation. Respectfully following the ratio of above decision, it is held that the expenditure under consideration is on the assets which are integral part of the wind mill and accordingly eligible for higher rate of depreciation. The addition made by Assessing Officer .....

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er cent on 'renewable energy devices' - like wind mills and any other specially designed devices, which run on wind mills. * Any 'electric power system' (EPS), to become operational and useful, can be divided into three systems, which when coalesced become the EPS. These parts are: (i) power generation system, which is wind mill in this case; (ii) power transmission system i.e. after power is generated it needs to be transmitted to places wherever it is required; and (iii) power .....

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electric power is generated at places which are usually intractable and near which the consumption of that energy is not possible. Therefore, this energy has to be 'transmitted' with the use of a 'transmission system' which further requires a 'distribution system' to make use of that energy. Therefore, the generation, the transmission and distribution of energy, in fact is the 'Wind-Mill'. Without the combination of the above three systems, the idea of wind mill w .....

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wherein it was held has under: "7. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. After going through the documentary evidences placed before us which also forms part of record before the departmental authorities, we do not find any infirmity in the findings of ld. CIT(A). It is clear from the assessment order, assessee s claim of depreciation at 100% on wind mill equipment was rejected by AO simply for .....

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98,90,000 3. Purchase of wind electric generators 20.03.2002 10,61,10,000 4. Registration & front end fee to IREDA 31.03.2002 13,70,000 Total 14,73,71,680 8. On perusal of the invoices raised towards sale of wind mill equipment and erection and commissioning of the same, it is to be noted that the price has been charged for supply, erection and commissioning of wind electrical generators. The seller of the wind mill equipment has also issued a certificate, a copy of which is at page 38 of th .....

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s are integral part of the wind mill unit and without them the unit cannot function. Further, assessee has also obtained an opinion from a technical expert i.e. M/s Servel Krishna Engineers Pvt. Ltd. , who in their opinion have stated that the main components of wind turbines are as under: 1. Blades, 2. Gear Box, 3. Generator, 4, Tower, 5. Foundation, 6. Step up transformer, 7. Metering arrangement, and 8. 11/33 kV overhead lines. They have further opined that wind electric generator is an integ .....

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